tralac’s Daily News selection

tralac’s Daily News selection

29 Apr 2020

The Intra-Africa Trade Fair, scheduled to take place in Kigali in September this year, has been postponed to September 2021

President Ramaphosa, as Chair of the African Union, convened a virtual meeting with AU REC Chairs today. ”President Ramaphosa will outline the strategies and measures that the AU Bureau has put in place, first, to contain the spread of the coronavirus pandemic and secondly, to deal with the massive economic impact. The meeting will also provide a platform for REC Chairpersons to outline actions taken and plans being implemented at regional level in response to COVID-19.”

Peter Mathuki (East African Business Council CEO):A coordinated EAC approach on dealing with combating COVID-19 is urgent and necessary. Due to our geographical proximity and interdependence it’s inevitable that we deploy a coordinated approach as a region. If one partner state defeats the pandemic and others or one partner state doesn’t, it will affect all of us as a region.”

John Ohiorhenuan: Cry the beloved continent (Punch)

This crisis should be an occasion to embrace the imperative of speedy implementation of the AfCFTA strategy. Africans know that Africa is not one country. Africa is 55 sovereign states, but many are small economies in global terms, even recognising the three largest economies of Nigeria, South Africa and Angola. Harnessing economies of scale, and the scalability of new technologies, is an obvious policy imperative for our small economies. The pandemic highlights the urgency of local production of medical supplies and equipment and indeed the urgency of local resilience. The COVID-19 pandemic will not be the last global disease outbreak, or the only thing to disrupt global supply lines. The SDGs require local resilience.

The importance of a responding to this crisis at the level of production reforms merely tells us that we can longer avoid the vigorous management of Africa’s position in the international economic system. We must confront the fact that our problem lies in the absence of an organic link between our pattern of domestic resource use and our pattern of domestic demand.

Many Africans of my generation will recall the plea, in our glory days in the 70s, to match our production and our resource use to the basic needs of people and build up our nascent industries to reduce our extreme dependence on imports for everything. Unfortunately, we have allowed a select few to benefit from the exploitation of its natural resources with the result of widespread poverty and extreme import dependence. Africa has taken the wrong lessons from the economists’ theory of comparative advantage. [Note: The author is attached to the Department of Economics of the University of Ibadan]

Kenya Economic Update: Protecting lives and livelihoods in the time of COVID-19 (World Bank)

Kenya’s GDP is projected to decelerate substantially in 2020 due to the negative impact of the coronavirus pandemic. Economic growth projection remains highly uncertain and the outcome will hinge on how the pandemic plays out internationally and within Kenya, along with policy actions taken to mitigate the situation. The latest pdf Kenya Economic Update (7.65 MB)  predicts growth of 1.5% in 2020 in the baseline scenario, with a potential downside scenario of a contraction to 1.0%, if COVID-19 related disruptions in economic activity last longer.

Extract: Historically, net exports’ contribution to real GDP growth is negative as import volume is larger than export volume. The extent of the drag of net exports depends on the volume of imports, because export volume is largely stable and has been falling more recently, especially manufacturing exports. In fact, as a share of GDP, exports of goods and services have contracted from 19.7% in 2018 to about 15.7% in 2019 and that decline will continue in 2020, owing in part to weak external demand, but also due to a significant contraction in manufacturing exports (estimated at 2.1% of GDP in 2019). On the other hand, import volume is expected to decrease from 20.4% of GDP in 2019 to about 18.8% of GDP in 2020, partly due to a lower oil import bill and reduced imports of capital and transportation equipment but also due to the COVID-19 shock resulting in reduced imports of consumer goods. As a result, the drag of net exports on growth in 2020 is approximately 0.3 percentage points, which is lower relative to an estimated drag of 0.7 percentage points in 2019.

ILO Monitor third edition: COVID-19 and the world of work

The continued sharp decline in working hours globally due to the COVID-19 outbreak means that 1.6 billion workers in the informal economy – that is nearly half of the global workforce – stand in immediate danger of having their livelihoods destroyed, warns the International Labour Organization. According to the ILO Monitor, COVID-19 and the world of work (pdf), the drop in working hours in the current (second) quarter of 2020 is expected to be significantly worse than previously estimated.

Compared to pre-crisis levels (Q4 2019), a 10.5% deterioration is now expected, equivalent to 305 million full-time jobs (assuming a 48-hour working week). The previous estimate was for a 6.7% drop, equivalent to 195 million full-time workers. This is due to the prolongation and extension of lockdown measures. Regionally, the situation has worsened for all major regional groups. Estimates suggest a 12.4% loss of working hours in Q2 for the Americas (compared to pre-crisis levels) and 11.8% for Europe and Central Asia. The estimates for the rest of the regional groups follow closely and are all above 9.5%. The first month of the crisis is estimated to have resulted in a drop of 60% in the income of informal workers globally. This translates into a drop of 81% in Africa and the Americas, 21.6% in Asia and the Pacific, and 70% in Europe and Central Asia.

How the COVID-19 pandemic disrupts global value chains (WEF)

Exports from China have declined to all regions across the world. This decline has been severe across the globe, with the exception of North America, where trade was already in decline for more than a year due to the ongoing trade disputes between the US and China. The picture of a steep decline in goods received from China is similar when looking at numerous individual European countries, including Austria, France, Germany, Italy and Spain. The collapse in production activity at the heart of many GVCs necessarily has implications for producers and consumers in countries further up and down the products’ value chains. The drop in imports from China implies that vital production parts are missing. A look at data from the German statistical office on input-output relationships shows that, in the German manufacturing sector, imported inputs represent roughly a quarter of industrial production. Ten per cent of all imported inputs come from China. This reliance on Chinese intermediates for production in Germany is particularly strong in the electronics, computing and textile manufacturing sectors.

A substantive nationalization or regionalization of supply chains, however, has the risk to further reduce diversification of suppliers in the world economy and reduces opportunities for developing and emerging economies, especially those outside Southeast Asia, to benefit from GVC-associated capital flows and access to international markets, human capital and knowledge. Such a development will almost certainly deal a significant blow to developing countries’ industrialization efforts and impede the socio-economic progress that has been recorded in many developing regions over the past years. The disruption of GVCs due to COVID-19 may therefore leave as a longer-term legacy: a significant reduction in developing countries’ potential to industrialize through linking into GVCs for many years to come. The COVID-19 pandemic calls for increasing our effort towards strengthening multilateral approaches to policy making and assisting countries in opening up other ways to enable inclusive and sustainable industrial development. [The authors: Adnan Seric, Holger Görg, Saskia Mösle, Michael Windisch]

100% of global destinations now have COVID-19 travel restrictions (UNWTO)

Following up on previous research, the latest data (pdf) from the United Nations specialized agency for tourism shows that 100% of destinations now have restrictions in place. Of these, 83% have had COVID-19-related restrictions in place already for four or more weeks and, as of 20 April, so far no destination has lifted them. In the regions of the Middle East (54%) and Africa (45%) the measure of suspending flights prevails over other types of measures, while in the Americas (51%), Europe (48%) and Asia and the Pacific (46%), it is the closure of borders (total or partial) which is more dominant.

Simonetta Zarrilli, Mariana Lopez: Leveraging digital solutions to seize the potential of informal cross-border trade (UNCTAD)

As of 2018, mobile money-enabled remittance services were available across 184 unique corridors, most of these in Sub-Saharan Africa, including Malawi, Tanzania and Zambia. Moreover, the cost of sending remittances via mobile money was found to be significantly lower than the average cost of sending remittances via other formal remittance service providers, including banks and money transfer operators. In 2018, the average cost of sending $200 using mobile money was 1.7% of the transaction; at the time, the average cost of remitting $200 in Sub-Saharan Africa was 9.4%. More research is needed to understand the potential of mobile money to support traders’ productivity and profitability, and their gradual integration into the formal economy. Insights from future studies can also continue to inform policies that create an enabling regulatory environment for mobile money and other digital solutions that can unlock greater efficiencies in intra African trade and help achieve the Sustainable Development Goals [Note: This blog builds on UNCTAD’s recent research (pdf) on female informal cross-border traders in Malawi, Tanzania, and Zambia to explore how mobile money can provide solutions for some of the challenges that these traders face]

Emerging trends from Africa’s digital platforms (Cenfri)

This note builds on our previous landscape study (pdf) of Africa’s digital platforms and is focused on trend insights on the nature and prevalence of digital platforms that are operating across eight focus countries in Africa, supplemented with insights on the scale of usage of platforms. In this note, we discuss key findings from the aggregate data and take a look at dynamics that are emerging by region. [The authors: Chernay Johnson, Hennie Bester, Pieter Janse van Vuuren, Matthew Dunn]

Digital platforms’ role in African digitisation and gig work on the back of COVID-19 (Cenfri)

Recent research by insight2impact shows the number of digital platforms – virtual marketplaces – in operation across Africa increased by 37% between 2018 and 2019. These platforms had already been estimated to provide income-generating opportunities to 4.8 million workers across seven countries in 2018. As industries affected by physical-distancing COVID-19 measures race to reconfigure value chains, could platform business models hold the key to accelerated digitisation? Moreover, what will happen to the livelihoods of platform workers who have been engaging in place-based working activities, and who are strongly dependant on this source of income? We explore these and other burning issues in this blog.

Data and privacy unprotected in one third of countries, despite progress (UNCTAD)

Only 66% of the nations of the world safeguard people’s data and privacy, despite an 11 percentage point increase in the adoption of data protection and privacy legislation in the period 2015-2020, according to new UNCTAD data. Results of a new survey on global cyberlaw adoption, released on 28 April during the UNCTAD eWeek, show that the share is even lower among least developed countries, at just 43%. The survey shows that another 10% of countries have draft legislations on data protection and privacy that are expected to become laws in 2020. They include Thailand and Brazil, which have based their legislation on the European General Data Protection Regulation issued in 2018 – similar to Australia, New Zealand, Korea and South Africa. The main results of the 2020 survey are:

  • Globally, 81% of countries have an e-transaction law. Europe has the highest share (98%), followed by the Americas (91%). The share is lowest in Africa (61%).

  • Although 79% of countries have cybercrime legislation, the share again varies widely by region: Europe has the highest (89%) and Africa the lowest (72%).

  • For consumer protection online, the global share is 56%. But the rate of adoption varies from 73% in Europe and 72% in the Americas to 46% in Africa.

  • Concerning data and privacy, 66% of countries have legislation. The share is 96% in Europe, 69% in the Americas, 57% in Asia and the Pacific and 50% in Africa.

  • In general, least developed countries are trailing behind. The share with relevant laws is particularly weak for data and privacy protection (43%) and consumer protection (40%). For e-transaction and cybercrime laws, the adoption rate is 64% and 66% respectively.